Master Lease Agreement

 

 

                             Master Lease Agreement

 

Lessor:   SPAR Marketing Services, Inc.    Lessee:  SPAR Marketing Force, Inc.

 

Address:  580 White Plains Road            Address: 1791 Harmon Road

          Tarrytown, NY 10591                       Auburn Hills, MI 48326

 

 

                          TERMS AND CONDITIONS OF LEASE

 

The undersigned  Lessee hereby requests Lessor to purchase the personal property

described in any Equipment Schedule  hereunder (herein called  "Equipment") from

the  supplier(s)  listed in any  Equipment  Schedule  hereunder  (herein  called

"Vendor"  and/or  "Manufacturer",  as applicable)  and to lease the Equipment to

Lessee on the terms and conditions of the lease set forth below.

 

Lessor  hereby  leases to Lessee,  and Lessee  hereby  leases from  Lessor,  the

Equipment,  all upon the terms and  provisions and subject to the conditions set

forth in this Master Lease Agreement (as the same may be supplemented, modified,

amended,  restated or replaced from time to time in the manner provided  herein,

this "Lease").

 

In  consideration  of  the  foregoing,   the  mutual  covenants  and  agreements

hereinafter set forth,  and other good and valuable  consideration  (the receipt

and adequacy of which is hereby acknowledged by the parties), the parties hereto

hereby agree as follows:

 

1.       NO WARRANTIES BY LESSOR. Lessee has selected the Equipment and may have

         entered into certain  purchase,  licensing,  or maintenance  agreements

         with  the  Vendor  and/or  Manufacturer   (herein  referred  to  as  an

         "Acquisition Agreement") covering the Equipment as further described in

         Paragraph  25  hereof.  If  Lessee  has  entered  into any  Acquisition

         Agreement,   each  agreement  shall  provide  for  certain  rights  and

         obligations  of the party  thereto with respect to the  Equipment,  and

         Lessee  shall  perform  all  of  the  obligations  set  forth  in  each

         Acquisition  Agreement as if this Lease did not exist.  LESSOR MAKES NO

         WARRANTY,  EXPRESS OR IMPLIED,  AS TO ANY MATTER WHATSOEVER,  INCLUDING

         THE CONDITION OF THE EQUIPMENT,  ITS  MERCHANTABILITY  OR ITS FITNESSES

         FOR ANY  PARTICULAR  PURPOSE,  AND,  AS TO  LESSOR,  LESSEE  LEASES THE

         EQUIPMENT  "AS IS" AND "WHERE IS".  LESSOR SHALL HAVE NO LIABILITY  FOR

         ANY LOSS,  DAMAGE OR EXPENSE OF ANY KIND WHATSOEVER  RELATING  THERETO,

         INCLUDING  (WITHOUT  LIMITATION) ANY SPECIAL,  INDIRECT,  INCIDENTAL OR

         CONSQUENTIAL DAMAGES OF ANY CHARACTER.

 

2.       CLAIMS  AGAINST  VENDOR  AND/OR  MANUFACTURER.  If the Equipment is not

         properly  installed,  does not operate as  represented  or warranted by

         Vendor and/or Manufacturer, or is unsatisfactory for any reason, Lessee

         shall make any claim on account  thereof  solely  against Vendor and/or

         Manufacturer pursuant to the Acquisition Agreement,  if any, and shall,

         nevertheless,  pay  Lessor  all rent  payable  under  this  Lease.  All

         warranties from Vendor and/or  Manufacturer are, to the extent they are

         assignable,  hereby  assigned  to Lessee  for the term of this Lease or

         until an Event of Default occurs  hereunder,  for Lessee's  exercise at

         Lessee's  expense.  Lessee may  directly  inquire  with  Vendor  and/or

         Manufacturer  to receive an accurate  and  complete  statement  of such

         warranties, including any disclaimers or limitations of such warranties

         or of any remedies with respect thereto.

 

3.       VENDOR NOT AN AGENT. Lessee understands and agrees that neither Vendor,

         nor any sales  representative  or other agent of Vendor, is an agent of

         Lessor. Sales representatives or agents of Vendor, and persons that are

         not  employed  by  Lessor  (including   brokers  and  agents)  are  not

         authorized  to waive or alter any term or condition of this Lease,  and

         no  representation as to the Equipment or any other matter by Vendor or

         any other person that is not employed by Lessor  (including  brokers or

         agents)  shall  in any way  affect  Lessee's  duty to pay the  rent and

         perform its other obligations as set forth in this Lease.

 

4.       NON-CANCELLABLE  LEASE.  This Lease and any Equipment  Schedule  hereto

         cannot be cancelled or terminated except as expressly  provided herein.

         Lessee  agrees  that its  obligation  to pay all rent  and  other  sums

         payable  hereunder  and the  rights  of  Lessor in and to such rent are

         absolute  and  unconditional  and are  not  subject  to any  abatement,

         reduction,  setoff, defense,  counterclaim or recoupment due or alleged

         to be due to, or by reason of, any past, present or future claims which

         Lessee may have against  Lessor,  any  assignee,  any  Manufacturer  or

         Vendor, or against any person for any reason whatsoever.

 

5.       ORDERING EQUIPMENT.  Lessee shall arrange for delivery of the Equipment

         so that it can be accepted in accordance with Paragraph 6 hereof within

         90 days after the date on which Lessor accepts  Lessee's offer to enter

         into this Lease with respect to any Equipment Schedule or by such other

         date as may be set forth in

 

 

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         an  Equipment  Schedule  or  Approval  Letter  issued  by Lessor as the

         Approval  Expiration Date. Unless otherwise  specified on the Equipment

         Schedule, Lessee shall be responsible for all transportation,  packing,

         installation,   testing  and  other  charges  in  connection  with  the

         delivery,   installation  and  use  of  the  Equipment.  Lessee  hereby

         authorizes  Lessor to insert in any  Equipment  Schedule  hereunder the

         serial  numbers  and  other   identification  data  of  Equipment  when

         determined by Lessor.

 

6.       ACCEPTANCE.  Lessee  acknowledges  that for  purposes of  receiving  or

         accepting  the  Equipment  from  Vendor,  Lessee is acting on  Lessor's

         behalf.   Upon  delivery  of  the  Equipment  to  Lessee  and  Lessee's

         inspection thereof, Lessee shall furnish Lessor a written statement (a)

         acknowledging receipt of the Equipment in good condition and repair and

         (b)  accepting it as  satisfactory  in all respects for the purposes of

         this Lease (the  "Certificate  of  Acceptance").  Unless  otherwise set

         forth in the applicable Equipment Schedule,  the first day of the month

         following  receipt  and  acceptance  of  the  Equipment  covered  by an

         Equipment  Schedule  shall  be the  Rent  Commencement  Date  therefor.

         However,  should  Lessee  have a previous  lease with  Lessor  which is

         active at the time of acceptance  of the Equipment  under the Equipment

         Schedule and said lease and the current  Equipment  Schedule  hereunder

         shall have the same  invoice  address then the Rent  Commencement  Date

         shall  occur  in the  month  immediately  following  acceptance  of the

         Equipment on the rent payment due date established with Lessee for said

         previous active lease. Lessor is authorized to fill in on any Equipment

         Schedule  hereunder the Rent  Commencement  Date in accordance with the

         foregoing.

 

7.       TERMINATION  BY  LESSOR.  If,  by the  Approval  Expiration  Date,  the

         Equipment described in any Equipment Schedule has not been delivered to

         Lessee and accepted by Lessee as provided in Paragraph 6 hereof,  or if

         other  conditions of Lessor's  Approval  Letter,  if any, have not been

         met,  then  Lessor may,  at its  option,  terminate  this Lease and its

         obligations  hereunder with respect to such  Equipment  Schedule at any

         time  after  the  expiration  of such 90 days  or any  date  after  the

         Approval  Expiration  Date,  as  applicable.  Lessor  shall give Lessee

         written  notice whether or not it elects to exercise such option within

         10 days after  Lessor's  receipt of Lessee's  written  request for such

         notice.

 

8.       TERM.  The term of this Lease shall be comprised of an Interim Term and

         an  Initial  Term.  The  Interim  Term shall  commence  on the date the

         Certificate of Acceptance is executed by Lessee (the "Acceptance Date")

         and terminate on the Rent  Commencement  Date. The Initial Term of this

         Lease shall begin on the Rent Commencement Date, and shall terminate on

         the later of (i) the last day of the last month of the Initial Term (as

         that Term is set forth in the applicable  Equipment Schedule hereto) or

         (ii) the date Lessee fulfills all Lessee's obligations hereunder.

 

9.       RENTAL. The rental amount payable to Lessor by Lessee for the Equipment

         will be set forth in the Equipment Schedule(s) ("Rental Amount). As the

         first  rent  payment  for the  Equipment,  Lessee  shall pay  Lessor in

         immediately  available funds on the Rent  Commencement Date the sum of,

         (i) the Rental  Amount,  and (ii)  Interim  Rent in an amount  equal to

         1/3Oth of the Rental Amount times the number of days from and including

         the Acceptance Date through but excluding the Rent  Commencement  Date,

         and  subsequent  rent  payments  shall  be due on the  same day of each

         calendar period as indicated on the Equipment  Schedule for the balance

         of the Initial Term.  Rent payments  shall be due whether or not Lessee

         has received any notice that such  payments are due. All rent  payments

         shall be paid to Lessor at its address set forth above or as  otherwise

         directed by Lessor in writing.

 

10.      RENEWAL If no default  shall have  occurred and be  continuing,  Lessee

         shall be entitled to renew this Lease with respect to all, but not less

         than all,  of the  Equipment  covered by an  Equipment  Schedule  for a

         minimum 12 month  period at an amount  equal to the fair market  rental

         value thereof,  in use and  operational,  in the condition  required by

         this Lease,  payable on a periodic  basis, as mutually agreed by Lessor

         and Lessee ("Renewal  Rent).  Lessee must give Lessor written notice of

         its intention to exercise said option, which notice must be received by

         Lessor at least 90 days  before  expiration  of the Initial  Term.  The

         first installment of the Renewal Rent shall be due at expiration of the

         Initial  Term of this  Lease.  Should  Lessee  fail to comply  with the

         provisions  described  above covering  renewal,  upon expiration of the

         Initial Term,  the term of this Lease shall be  automatically  extended

         for a term of 3  months.  Thereafter,  the term of this  Lease  will be

         extended for subsequent full month periods,  on a month to month basis,

         until Lessee has given at least 90 days written notice terminating this

         Lease.  Such  termination  will  take  effect  upon  completion  of all

         Lessee's  obligations  under  this  Lease  (including  payment  of  all

         periodic rental payments due during such 90 day period,  as provided in

         Paragraph 9 of this  Lease).  At any time after the  expiration  of the

         Initial  Term,  if this Lease has been  automatically  extended  as set

         forth herein,  Lessor  reserves the right to terminate this Lease by 30

         days written notice to Lessee.

 

11.      LOCATION;  INSPECTION;  LABELS. The Equipment shall be delivered to and

         shall not be removed  without  Lessor's prior written  consent from the

         "Equipment  Location" shown on the related  Equipment  Schedule,  or if

         none is specified,  Lessee's billing address shown above.  Lessor shall

         have the right to inspect the  Equipment  at any  reasonable  time.  If

         Lessor  supplies Lessee with labels stating that the Equipment is owned

         by  Lessor,  Lessee  shall  affix  such  labels  to and keep  them in a

         prominent place on the Equipment.

 

 

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12.      REPAIRS; USE; ALTERATIONS.  Lessee, at its own cost and expense,  shall

         keep the  Equipment  in good  repair  and  working  order,  in the same

         condition  as when  delivered  to  Lessee,  reasonable  wear  and  tear

         excepted,  and  in  accordance  with  the  manufacturer's   recommended

         specifications;  shall use the Equipment lawfully;  shall not alter the

         Equipment  without  Lessor's  prior  written  consent,  shall  use  the

         Equipment in compliance  with any existing  Manufacturer's  service and

         warranty  requirements  and any  insurance  policies  applicable to the

         Equipment and shall furnish all parts and servicing  required therefor.

         All parts, repairs, additions, alterations and attachments placed on or

         incorporated  into the Equipment which cannot be removed without damage

         to the  Equipment  shall  immediately  become part of the Equipment and

         shall be the  property of the Lessor.  Lessee will obtain and  maintain

         all permits,  licenses and registrations  necessary to lawfully operate

         the facility  where the Equipment is located.  Lessee shall comply with

         all applicable  environ- mental and industrial  hygiene laws, rules and

         regulations  (including  but not limited to federal,  state,  and local

         environmental  protection,  occupational,  health and safety or similar

         laws, ordinances and restrictions). Lessee shall, not later than 5 days

         after the occurrence, provide Lessor with copies of any report required

         to be filed with governmental agencies regulating environmental claims.

         Lessee  shall  immediately  notify  Lessor in writing of any  existing,

         pending or threatened  investigation,  inquiry,  claim or action by any

         governmental  authority in connection  with any law, rule or regulation

         relating to industrial  hygiene or environmental  conditions that could

         affect the Equipment.

 

13.      MAINTENANCE.  If the  Equipment  is such that  Lessee  is not  normally

         capable of maintaining it, Lessee, at its expense, shall enter into and

         maintain in full force and effect  throughout  the Initial Term and any

         renewal  term,  Vendor  and/or   Manufacturer's   standard  maintenance

         contract,  and shall  comply with all its  obligations  thereunder.  An

         alternate source of maintenance may be used with Lessor's prior written

         consent.  Such  consent  shall be granted  if, in  Lessor's  reasonable

         opinion,  the Equipment  will be  maintained in an equivalent  state of

         good repair, condition and working order.

 

14.      SURRENDER.  Provided that Lessee does not exercise the purchase  option

         as set forth in Paragraph 27 hereof, upon the expiration of the Initial

         Term,  or any renewal  term,  or upon demand by Lessor made pursuant to

         Paragraph 21 of this Lease,  Lessee, at its expense,  shall return all,

         but not less than all, of the  Equipment by delivering it to such place

         or on board such carrier,  packed for shipping,  as Lessor may specify.

         Lessee agrees that the Equipment,  when returned,  shall be in the same

         condition  as when  delivered  to  Lessee,  reasonable  wear  and  tear

         excepted,  and in a condition  which will permit  Lessor to be eligible

         for Manufacturer's  standard maintenance contract without incurring any

         expense  to repair or  rehabilitate  such  Equipment.  Lessee  shall be

         liable for reasonable and necessary  expenses to place the Equipment in

         such  condition.  Lessee shall remain  liable for the  condition of the

         Equipment  until  it  is  received  and  accepted  at  the  destination

         designated by Lessor as set forth above.  If any items of Equipment are

         missing or damaged when returned,  such occurrence  shall be treated as

         an event of Loss or Damage  with  respect  to such  missing  or damaged

         items and shall be  subject  to the terms  specified  in  Paragraph  15

         below.  Lessee shall  provide  Lessor with a Letter of  Maintainability

         from the  Manufacturer of the Equipment,  which letter shall state that

         the  Equipment  will  be  eligible  for  the  Manufacturer's   standard

         maintenance contract when sold or leased to a third party. Lessee shall

         give Lessor prior written  notice that it is returning the Equipment as

         provided above,  and such notice must be received by Lessor at least 90

         days  prior to such  return.  Should  Lessee  fail to  comply  with the

         provisions  described above covering surrender,  upon expiration of the

         Initial Term,  the term of this Lease shall be  automatically  extended

         for a term of 3  months.  Thereafter,  the term of this  Lease  will be

         extended for subsequent full month periods,  on a month to month basis,

         until Lessee has given at least 90 days written notice terminating this

         Lease.  Such  termination  will  take  effect  upon  completion  of all

         Lessee's  obligations  under  this  Lease  (including  payment  of  all

         periodic rental payments due during such 90 day period,  as provided in

         Paragraph 9 of this  Lease).  At any time after the  expiration  of the

         Initial  Term,  if this Lease has been  automatically  extended  as set

         forth herein.  Lessor  reserves the right to terminate this Lease by 30

         days written notice to Lessee.

 

15.      LOSS OR  DAMAGE.  Lessee  shall bear the  entire  risk of loss,  theft,

         destruction  of or damage to the Equipment or any item thereof  (herein

         "Loss or Damage")  from any cause  whatsoever.  No Loss or Damage shall

         relieve Lessee of the obligation to pay rent or of any other obligation

         under this Lease. In the event of Loss or Damage, Lessee, at the option

         of Lessor;  shall: (a) place the same in good condition and repair; (b)

         replace  the same  with  like  equipment  acceptable  to Lessor in good

         condition and repair with clear title thereto in Lessor;  or (c) pay to

         Lessor the total of the following amounts: (i) the total rent and other

         amounts due and owing at the time of such payment,  plus (ii) an amount

         calculated  by Lessor which is the present value at 5% per annum simple

         interest  discount of all rent and other amounts payable by Lessee with

         respect to said item from date of such payment to date of expiration of

         its Initial Term, plus (iii) the "reversionary value" of the Equipment,

         which shall be  determined by Lessor as the total cost of the Equipment

         less 60% of the total rent (net of sales/use taxes, if any) required to

         be paid pursuant to Paragraph 9. Upon Lessor's receipt of such payment,

         Lessee and/or Lessee's  insurer shall be entitled to Lessor's  interest

         in said item, for salvage purposes, in its then condition and location,

         "as-is ", without any warranty, express or implied.

 

 

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16.      INSURANCE.  Lessee  shall  provide,  maintain  and pay for (a) all risk

         property  insurance  against  the  loss or theft  of or  damage  to the

         Equipment,  for the full replacement value thereof,  naming Lessor as a

         loss payee,  and (b)  commercial  general  liability  insurance (and if

         Lessee is a doctor;  hospital or other  health care  provider,  medical

         malpractice  insurance).  All such  policies  shall  name  Lessor as an

         additional  insured and shall have  combined  single  limits in amounts

         acceptable to Lessor.  All such insurance policies shall be endorsed to

         be primary and  non-contributory  to any policies maintained by Lessor.

         In  addition  Lessee  shall cause  Lessor to be named as an  additional

         insured on any excess or umbrella policies  purchased by Lessee. A copy

         of  each  paid-up  policy  evidencing  such  insurance   (appropriately

         authenticated by the insurer) or a certificate of the insurer providing

         such coverage  proving that such  policies have been issued,  providing

         the coverage  required  hereunder shall be delivered to Lessor prior to

         the  Rent  Commencement  Date.  All  insurance  shall  be  placed  with

         companies  satisfactory  to Lessor  and  shall  contain  the  insurer's

         agreement to give 30 days written notice to Lessor before  cancellation

         or any material change of any policy of insurance.

 

17.      TAXES.  Lessee shall  reimburse to Lessor (or pay directly if, but only

         if,  instructed  by Lessor)  all charges  and taxes  (local,  State and

         federal) which may now or hereafter be imposed or levied upon the sale,

         purchase,  ownership,  leasing,  possession  or use  of the  Equipment;

         excluding,  however; all income taxes levied on (a) any rental payments

         made to Lessor hereunder;  (b) any payment made to Lessor in connection

         with Loss or Damage to the Equipment under Paragraph 15 hereof,  or (c)

         any payment made to Lessor in connection with Lessee's  exercise of its

         purchase option under Paragraph 27 hereof.

 

18.      LESSOR'S  PAYMENT.   If  Lessee  fails  to  provide  or  maintain  said

         insurance,  to pay said taxes,  charges and fees,  or to discharge  any

         levies, liens and encumbrances created by Lessee, Lessor shall have the

         right, but shall not be obligated,  to obtain such insurance,  pay such

         taxes,  charges  and fees,  or effect  such  discharge.  In that event,

         Lessee  shall  remit to  Lessor  the cost  thereof  with the next  rent

         payment.

 

19.      INDEMNITY. (a) General Indemnity. Lessee shall indemnify Lessor against

         and hold Lessor  harmless  from any and all claims,  actions,  damages,

         costs,  expenses  including  reasonable  attorneys' fees,  obligations,

         liabilities  and  liens  (including  any of the  foregoing  arising  or

         imposed  under  the   doctrines  of  "strict   liability"  or  "product

         liability"  and  including  without  limitation  the cost of any fines,

         remedial action, damage to the environment and cleanup and the fees and

         costs of  consultants  and  experts),  arising out of the  manufacture,

         purchase, lease, ownership, possession, operation, condition, return or

         use of the Equipment, or by operation of law, excluding however, any of

         the foregoing resulting from the gross negligence or willful misconduct

         of Lessor.  Lessee  agrees  that upon  written  notice by Lessor of the

         assertion of such a claim,  action,  damage,  obligation,  liability or

         lien, Lessee shall assume full  responsibility for the defense thereof.

         Lessee's choice of counsel shall be mutually  acceptable to both Lessee

         and Lessor.  This  indemnity also extends to any  environmental  claims

         arising  out of or  relating  to prior acts or  omissions  of any party

         whatsoever.  The provisions of this paragraph shall survive termination

         of  this  Lease  with  respect  to  events   occurring  prior  to  such

         termination.

 

         (b)      Tax  Indemnity.  Lessee  acknowledges  that  Lessor  shall  be

                  entitled to all tax benefits of ownership  with respect to the

                  Equipment (the "Tax Benefits"),  including but not limited to,

                  (i) the  accelerated  cost recovery  deductions  determined in

                  accordance with Section 168(b)(1) of the Internal Revenue Code

                  of 1986 for the  Equipment  based on the original  cost of the

                  Equipment  to  Lessor  (ii)  deductions  for  interest  on any

                  indebtedness  incurred by Lessor to finance the  Equipment and

                  (iii)